Financing sustainable peatland management

31 May 2017

Ambitious global restoration goals have been set as per development agenda which would require close to $36-49 billion in investments each year. Indonesia, whose emissions are led by the Land Use Sector, requires an investment of more than $80 billion needed to rehabilitate forests alone. 2015 witnessed massive forest fires resulting in emissions spiking as much as daily emissions from the entire European Union for 26 days that put communities and critical biodiversity under threat. Indonesia is currently falling short for investments needed to scale peat restoration activities. Mobilizing additional finance and utilizing current investments to scale would help protect the livelihoods of forest dependent communities, allow sustainable production of commodities to fulfill competing land use demands and build resilience at the landscape level by preventing loss and damage worth over $16.1 billion.

The BRG has made great strides in efforts for financing Indonesia’s peat restoration target, for which the World Bank estimates initial cost for rehabilitating the 2 million hectares to be approximately IDR 27 trillion ($2 billion). The Government of Indonesia prepared an economic package last year which resulted in up to IDR 860 billion for 250,000 ha (12.5% of target) being financed through allocations from the 2017 State Budget. The private sector has pitched in financing for restoration of 400,000 ha (20%) on concession lands, and donor contributions would help in restoring an additional 50,000 Ha (2.5%) (including over US$800 million from Norway, US$3 million from the UK, and US$2.9 million from the US and potential pledges from CLUA and Packard of $15Million). In addition, significant momentum has been built towards financing sustainable landscapes through varied instruments—fiscal, private sector investment, green landscape bonds, etc.—and initiatives are working in parallel towards peatland restoration and sustainable management of land use like the Landscape Fund, the first ‘forest bond’ issued by IFC on the London Stock Exchange, the Tropical Landscape Financing Facility and Belantara Foundation’s Landscape restoration program. However, these contributions are still fall short to fulfill the country’s target by 1.1 mHa.

This session begins with exploring options to mobilize finance for the gap and leverage existing initiatives and investments towards sustainable land use for landscapes.